Peak oil
Peak oil refers to the theoretical point at which global oil production reaches its maximum rate, after which production will gradually decline. This concept was first introduced by geologist Marion King Hubbert in the late 1940s and suggests that oil extraction follows a bell-shaped curve, characterized by initial growth, a peak, and eventual decline. Hubbert's predictions indicated that the United States would reach its production peak around the early 1970s, which coincided with actual events, while he forecasted a global peak in the early 21st century.
The implications of peak oil are significant, as it suggests that oil will become scarcer and more expensive over time, potentially leading to economic disruptions and a shift away from petroleum reliance. The model has been subject to debate, especially with advancements in extraction technologies like hydraulic fracturing, which have temporarily increased oil production and challenged Hubbert's early predictions.
As of recent assessments, opinions on when peak oil will occur vary widely among experts, with some forecasting it by 2028 and others predicting a peak much later. The broader discussion also encompasses environmental considerations, with some advocating for a transition to alternative energy sources in light of potential future shortages. Thus, peak oil remains a complex and evolving topic, intertwining geological realities, technological advancements, and socio-economic factors.
Peak oil
"Peak oil" is a statistical model (logistic distribution) that helps define the life expectancy of the Earth’s petroleum resources. Based on supply-and-demand curves, there is a point in time at which extractions of petroleum resources will reach a maximum (peak) and begin to decline until the resources are exhausted. The concept of peak oil is used as a guide to understand the life expectancy of the petroleum resources of the planet.
Background
The "peak oil" model was first put forward by geologist Marion King Hubbert (1903–1989) in a 1948 speech to the American Association for the Advancement of Science. His presentation stirred such a reaction that he formalized it into a paper, "Energy from Fossil Fuels" (1949), published in the journal Science. However, Hubbert is better known for a speech he gave for the meeting of the Southwest Section of the American Petroleum Institute in San Antonio, Texas in the spring of 1956. He explained that the extraction of petroleum follows a distribution curve, starting at zero, reaching a maximum, and then declining to zero. (This curve is often mistaken for a typical Gaussian curve; while similar, they are not the same.) The peak of this curve represents the maximum extraction production and a point at which roughly one-half of the resource is depleted. This is true for an individual oil field as it is for the entire Earth. Crossing the peak, petroleum becomes more expensive and scarce.
In 1956, Hubbert told his astonished audience that the forty-eight states (excluding Hawaii and Alaska, which did not become states until 1959) would peak somewhere between the years of 1965 and 1971 (in hindsight, a peak appeared to come in 1970). The initial reaction to his paper was mixed, ranging from shock to denial. After all, in 1956, the price of gas in the United States was about $0.20 per gallon. Gasoline seemed to be cheap and plentiful. The possibility of shortages and high prices did not register with that generation.
Further, extrapolating his calculations, he predicted a world peak somewhere in the first decade of the twenty-first century; many geologists initially claimed it occurred during 2006–2008, but the global economic slowdown of 2008–2009 muddied this picture. Fifty years of additional data since the original theory was developed revealed many uncanny accuracies of Hubbert’s predictions but also some flaws, polarizing the supporters and critics of the model. Most importantly, the development of new technologies to extract oil previously thought unobtainable—particularly hydraulic fracturing, or fracking, for shale oil—caused a resurgence in oil production both in the United States and globally, throwing off the original predictions. This has caused some observers to argue that the entire peak oil model is invalid. However, many researchers claimed the general idea was still valid in 2024.
Hubbert’s curve is an ideal, and only through computer smoothing statistical programs does order appear from a chatter of data. The curve does have some general characteristics that correspond to geological and economic forces.
The Age of Abundance (c. 1859–1974)
The first part of the curve represents a period in which discovery and extraction are large and cheap. The first fields to be explored and pumped are large and near the surface. These fields are legendary in their quality and production and are often associated with Hollywood’s imagery of "wildcatters" striking it rich with gushers spewing oil into the air. In essence, with a bit of luck, the oil flows without effort to the surface. Fields such as Ghawar, in Saudi Arabia, and Spindletop, in East Texas, are typical of large, high-quality, near-surface deposits discovered and exploited early in the curve. In specific terms, this period began with discovery and production of petroleum in western Pennsylvania, West Virginia, and Ohio just before the American Civil War (1861–1865).
Petroleum became economically popular as an alternative fuel for whale oil and a source of kerosene. Gasoline was considered a waste product until the internal combustion engine was developed, and the market for lubricants and gasoline grew with the automobile market. Both World War I and World War II were based on petroleum, and the Western world was becoming a petroleum-based society. Petroleum seemed to be a miracle molecule (more than three thousand industrial products are made from petroleum). The period ended with the combination of the United States crossing its own peak in 1970 and the Organization of Petroleum Exporting Countries (OPEC) response to the Yom Kippur War (1973) in the Middle East, in which oil supplies to the West were cut off, resulting in shortages, rationing, and long lines at gas stations.
The Age of Transition (c. 1975–2015)
The second part of the curve is the ascension to the peak and the first indicator of a decline. This period is characterized by the big-easy fields producing less and less while more and more technology is applied to extract the maximum yield. Exploration shifts to smaller and deeper deposits, with many technological problems in keeping up with demand. Crossing the peak, production flattens out and begins a slow decline. This is not as obvious as it might seem. Typical of this period is a dramatic boom-bust cycle of price, production, and discovery, the cycle lasting for perhaps as long as a decade. This unsettled time generates a sufficient amount of "noise" in the data that is difficult to diagnose while embedded in the period. While Hubbert's calculations placed the global oil peak somewhere around 1995–2000 (predictions that proved incorrect due to a boom from advanced extraction technologies), many twenty-first century researchers estimate that peak oil has or will occur sometime in the 2010–2035 period.
Also typical of this period are rumors: reports of the next big (billion-barrel) field in some technologically challenging geography. It is here that technology comes to the rescue to help keep up with the demand, but technology cannot violate the basic laws of chemistry and physics. There are limits to what can be extracted, and no one extracts 100 percent of a field. In fact, a 20 to 60 percent recovery appears to be the range of success.
The Slope, Slide, and Cliff
The third portion of the curve describes the downward slope to extinction of the resource. For economies based on petroleum (the entire Western world and Japan, India, and China), this is predicted to involve considerable disruption and economic turmoil. This period will be one of transition away from petroleum as a fuel, fertilizer, industrial feedstock, and basis for medicines toward something else.
The slope and slide are the gentler parts of this transition. The slope is the slow regression from the peak. Here demand continues to rise, but supply falls further and further behind. In the twenty-first century, people awake to have less petroleum energy than they did the day before, which leads to price rises and shortages.
In the slide portion, governments and militaries become nervous as they envision themselves as more vulnerable. Access to petroleum equates to national security. Therefore, extreme measures are taken to acquire and secure the remaining petroleum.
The cliff can only be imagined. Perhaps this is the collapse of Western (petroleum-based) civilization with riots and anarchy, or perhaps this is a relatively peaceful transition to other fuel sources, manufacturing techniques, and products yet to be imagined. As the era of petroleum reliance ends, it will be replaced by a new energy form, just as the horse and buggy evolved into reliance on petroleum fueled cars.
Defining the Curve
Disagreements exist about how much oil remains. This question is what geologists and economists have been debating to define the rest of Hubbert’s curve. Precise numbers on petroleum reserves are virtually impossible to define because those with access do not want to divulge what they know. Most of the world’s oil—80.4 percent of proven crude oil reserves as of 2021—is controlled by various governments of OPEC, 67.1 percent of which reside in the Arab world. The remaining 19.6 percent, composed of non-OPEC countries, is controlled by governments that understand that petroleum equates with national security, and no country wants to be viewed as vulnerable. A small percentage is held by public and private corporations. To attract investors, they must remain publicly optimistic. In short, reserve figures are the most positive data the source can support. Therefore the "truth" is probably known to no one, and forecasters are reduced to what seems reasonable based on broad assumptions.
The truth is also tied to economic realities. Regardless of how much energy is in the ground, the economic principle of "energy returned on energy invested" (EROEI) is always in play. This principle states that one must spend a barrel of oil to find some number of barrels of oil. In the early part of the curve, the ratio was about 1:50. That is, the cost of one barrel of oil could be used to find fifty. Early in the twenty-first century, technology allowed the expenditure of 1 barrel of oil to recover 2 to 5 barrels of oil. When the EROEI drops to 1:1, it is no longer economically feasible to extract. In essence, the net energy gain becomes zero.
In November 2005, the US Senate Committee on Foreign Relations held a hearing on peak oil and the coming American energy crisis. Senators and witnesses repeatedly called such a crisis unavoidable. At the 2006 stockholders’ meeting of Chevron-Texaco, a keynote speaker said, "It took us 125 years to burn the first trillion barrels of global oil; we will burn the rest of it in 30 years." The best data in the first decades of the twenty-first century suggests that Hubbert’s curve and the hydrocarbon era will be well defined by mid-century. In 2024, predictions of peak oil were mixed. Equinor, backed by energy researcher Rystad Energy, predicted a 2028 peak. The 2022 OPEC outlook report predicted a peak due to rising demand by 2040. TotalEnergies predicted an early to mid-2030s peak, BP, on the more liberal side of the argument, predicted a 2050 peak.
While peak oil predictions varied with considerable uncertainty surrounding the issue, the environmental impact of lowered consumption of oil in the early twenty-first century, based on the lack of availability, was predicted to allow the achievement of some objectives outlined in the Paris Agreement by 2050. This side effect of peak oil was often dismissed by skeptics of climate change in 2022 but embraced as a compelling argument for increased use of environmentally friendly alternatives to oil by climate activists.
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